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The Tennessee Lawful Employment Act of 2011:

C racking Down on Unauthorized Workers

On June 7, 2011, Tennessee Governor Bill Haslam signed a new law, the Tennessee Lawful Employment Act, which will require Tennessee employers to either use the federal E-Verify program for new hires, or to request and retain various documents from newly hired employees. The law will take effect for larger Tennessee employers on January 1, 2012.

Tennessee is joining 15 other states that have enacted similar legislation to curtail the employment of unauthorized aliens by passing its own employment eligibility verification law. This new law had broad legislative support, being approved in the Tennessee House unanimously and approved in the Tennessee Senate by a vote of 29-2. The new law was opposed by much of the Tennessee business community.

The new law requires employers to enroll in the federal E-Verify program prior to hiring an employee, verify the work authorization status of new employees using E-Verify, and retain records of any results generated by E-Verify. As an alternative, employers may request and retain one of the following documents from an employee before employment begins: (1) a valid Tennessee driver license or photo identification license issued by the Department of Safety; (2) a valid driver license or photo identification license issued by another state where the issuance requirements are at least as strict as those in Tennessee; (3) an official birth certificate issued by a U.S. state, jurisdiction or territory; (4) a U.S. government-issued certified birth certificate; (5) a valid, unexpired U.S. passport; (6) a U.S. certificate of birth abroad; (7) a report of birth abroad of a citizen of the U.S.; (8) a certificate of citizenship; (9) a certificate of naturalization; (10) a U.S. citizen identification card; or (11) a valid alien registration documentation or other proof of current immigration registration recognized by the U.S. Department of Homeland Security that contains the individual's complete legal name and current alien admission number or alien file number. It should be noted that this list of acceptable documents has fewer documents than federal Form I-9. It also allows certain documents that are not currently acceptable under federal law (certificates of citizenship and naturalization).

When using Form I-9, employers cannot specify which documents on the list of acceptable documents an employee should provide to prove their employment eligibility. Thus, any requests for a specific document may be made to comply with the Tennessee law only. If an employer chooses to use E-Verify, it must do so for all new hires, regardless of whether it obtains one of the listed documents.

In addition to requiring proof of employment eligibility for new hires, the new Tennessee law also requires documentation for "non-employees," such as independent contractors. Employers must request and retain one of the documents listed above for any non-employee with whom the employer contracts for labor. Under current federal law, employers may not contract with individuals that they know are unauthorized to work, but federal law does not require employers to verify that contractors are authorized to work.

Who must comply with the law and by when? The Tennessee Lawful Employment Act will eventually cover almost every employer in Tennessee. The only employers who will not be covered are those with five (5) or less employees. The law will take effect depending on the size of the employer, as follows:

  • January 1, 2012: Employers with 500+ employees and government entities
  • July 1, 2012: Employers with 200 to 499 employees
  • January 1, 2013: Employers with 6 to 199 employees

What are the penalties for noncompliance with the new law? The penalties for violation of the Act are very stiff, as outlined below:

  • First offense: a $500 civil penalty, plus $500 for each worker not properly verified
  • Second Offense: a $1,000 civil penalty, plus $1,000 for each worker not properly verified
  • Third or Subsequent Offense: a $2,500 civil penalty, plus $2,500 for each worker not properly verified

These are the monetary penalties. In addition, sanctions may be imposed for employers that knowingly misclassify workers in an attempt to avoid the requirements of the law. Employers must submit evidence of compliance within 60 days after being found in violation of the law. A business that fails to do so may have its business license suspended until it corrects the violation. The Tennessee Department of Labor will post a publicly-available list on its website of employers that it finds have violated the law.

Will the new Tennessee law pass legal muster under the U.S. Constitution? Quite possibly yes. On May 26, 2011, the U.S. Supreme Court upheld Arizona's 2007 similar law that requires Arizona employers to use E-Verify, punishable by suspension or revocation of the employer's business license. The Supreme Court, by a 5-3 vote, found that language in the federal immigration law (IRCA) did not preempt the state law because it was a licensing law permissible under IRCA. The Court found that the federal E-Verify program also did not preempt the state, because "although Congress had made the program voluntary at the national level, it had expressed no intent to prevent States from mandating participation."

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